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Casual Games: Casual Games: Where It’s All GoingWhere It’s All GoingRob Glaser

Founder & CEO, RealNetworks

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Where It All StartedWhere It All Started

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Games For The Rest of UsGames For The Rest of Us

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Why Did It Take So Long?Why Did It Take So Long?

•Before the Internet:

• No easy way to try casual games

• No dedicated place to learn about & buy them

• Lots of shovelware

•In the early Internet period:

• Web games became popular, but advertising didn’t work well, so no way to get paid!

• Not enough bandwidth for easy downloading

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Broadband To The Rescue!Broadband To The Rescue!US Households with BroadbandUS Households with Broadband

Sources: Jupiter Internet Access Model, Updated 2005 (US Only)

(mill

ions)

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Great Growth Potential WorldwideGreat Growth Potential Worldwide

Source: eMarketer, May 2005

Total Worldwide Internet Users

845M

Current Broadband Subscribers

194M

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Where We Are TodayWhere We Are Today

•Industry-standard Try-Before-You-Buy model has yielded a robust PC download business

• Dozens of successful individual games

• Profitable subscription services

•Growing customer bases in 3 regions

• North America, Europe, and Japan

•Real downloads over 750,000 games a day

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Challenges And Challenges And OpportunitiesOpportunities•Integrating with off-line properties

•New ways to monetize game play

•New connected platforms

•New markets & new interaction models

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The 98% OpportunityThe 98% Opportunity

•750,000 downloads/day, but

•Only 2% result in a consumer paying for a game

•Early ad models didn’t work because either

• Consumers found the ads intrusive, or

• Consumers ignored the ads

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The 98% Solution: Advertising The 98% Solution: Advertising Done RightDone Right

•Ads *must* be designed right, not overly intrusive

•Ads *must* feel contextually correct -- sponsorships, skinning, and product placement are all parts of good execution.

•Fortunately, a successful model to build on:

• Clicktopia – our Dutch online game experience

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Pre-roll

Banner

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NewBanner

Reminder

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OriginalBanner

LeaveBehind

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Integrating Ads into Downloadable Integrating Ads into Downloadable GamesGames

•Rich media between game levels

• Real partnership with Eyeblaster

•We will test & try multiple models

• “Extra” free game-play

• Full free games for library games

• Other windowing models

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Casual Games & New Casual Games & New PlatformsPlatforms

•Mobile

•Next generation handhelds

•Next generation consoles

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Mobile is a Great OpportunityMobile is a Great Opportunity

• Massive number of IP-enabled devices

• The ultimate go-everywhere device

• Casual games are a great fit with the constraints of mobile phones

• Small screens

• Relatively slow processors

• 70.5% of mobile game revenue is in casual games

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Luxor and Other Great Casual Luxor and Other Great Casual Games are Leading the WayGames are Leading the Way

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•Device fragmentation

But, 2 Big IssuesBut, 2 Big Issues

• Off-deck/D2C is a ball-buster

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EMERGE EMERGE -- Our Solution to -- Our Solution to FragmentationFragmentation

Panasonic X60 Nokia 3200

• From a single code base, EMERGE supports• Over 300 handsets (BREW and J2ME)• More than 100 carriers• 11 languages

• Some features filtered out to find the optimized balance for each handset to create as rich a user experience as possible

SonyEricsson F5001

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How EMERGE Can Work For How EMERGE Can Work For YouYou•EMERGE dramatically reduces porting costs

• 1/3 or less compared to other porting methods

•Currently partnering with game developers:

• For More Information: http://mrgoodliving.com/emerge

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Nintendo on DS/Train your Brain Nintendo on DS/Train your Brain is Capitalizing on the Health and is Capitalizing on the Health and Education Benefits of Casual Education Benefits of Casual GamesGames

• Current research opens even more markets and opportunities – games are good for your health!

• Research has shown that gaming activity that uses problem solving skills will slow age-related declines in mental ability.

• Gaming has also been shown to help with pain management and education

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XBOX 360 Live ArcadeXBOX 360 Live Arcade•Bringing the casual download model to the

console

•It’s early, but conversion to purchase is encouraging

•Xbox is bringing a new demographic to casual games

• The hardened gamer stops slaying dragons to play a game of Uno? Yes…

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Casual Games & CommunityCasual Games & Community•What is it?

• Shared high scores• IM and chat around or during game• User generated content

• Message boards• Ratings

• Multiplayer games• Competitive• Collaborative

•Different users have different goals and desires • Key is to offer a wide range of choices

•Now is the time to experiment

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Learning From Around the Learning From Around the WorldWorld

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Model is to Pay for Items & Model is to Pay for Items & Social Status, Not Basic Game-Social Status, Not Basic Game-playplay

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Casual Games: Ready for Casual Games: Ready for Prime-timePrime-time•Together, we’ve built a very successful PC

games business

•Major growth opportunities in many dimensions:• PC ad-supported Casual Games done right• Mobile and Next Gen Handhelds & Consoles• New underlying models around community &

social status• Worldwide Growth

•While there are challenges, if we work together the future opportunity is limitless!